India’s biggest fintech has doubled its user base in a year and is on track to have 500 million customers by 2020. It is backed by Ant Financial and Softbank and spurred by state policy on financial inclusion. How far can Paytm go?

It is a year since Indian prime minister Narendra Modi turned his country’s transactional finances upside down with his demonetization programme. The dust has now settled.

People will argue for years about the pros and cons of what he did, but there is near universal agreement on the company that did best out of the whole thing. Paytm was already big news before Modi’s demonetization shock last November 8, when he withdrew all the Rp500 and Rp1,000 banknotes from circulation to curb corruption and the black economy, he said, apparently without warning anyone in the banking sector that he was about to do so.

The rags-to-riches story of Paytm’s founder, Vijay Shekhar Sharma, who not so long ago would walk 20 kilometres across Delhi because if he paid for an auto-rickshaw he would not have enough money for dinner, and who was flat broke as recently as 2003, was by then already well-rehearsed in Indian media.

The journey of his company from a prepaid mobile webcharge website in 2010 to an Alibaba and Ant Financial-funded juggernaut that is the largest mobile payment service platform in India was well underway.

But demonetization gave the company an almighty lift. Modi’s move completely pole axed India’s cash transaction economy and forced people, and in particular the small merchants who are legion in the country, to look at alternatives.

The Paytm wallet was the simplest answer and people flocked to it. It went from 125 million wallet customers before demonetization to 185 million three months later, and it has continued to grow, hitting 280 million users by November 2017.

Sharma and his staff saw an opportunity and put everything they had into it; Sharma has said that he and his staff did 600 days’ worth of work in 60. They ran full-page ads the following day praising Modi for “taking the boldest decision in the financial history of independent India,” a stunt that was not without its critics. Opposition politician Rahul Gandhi suggested Paytm stood for “Pay to Modi” (it is actually Payment through mobile).

Sharma’s catch-phrase is ‘Go big or go home’ – it is on his office wall, on his coffee mugs, all over his interviews – and he certainly ran big on demonetization.

Looking back on it now in New Delhi, Paytm’s CFO Madhur Deora, who joined from Citi a month before demonetization, is keen to point out that the company was already very much on its way before Modi’s unexpected bounty came along.

“We were doing payment solutions for offline merchants since October 2015,” he explains, making it the only company outside the card networks that was doing so in India at the time. “So when demonetization happened, we had the product and the sales infrastructure already. It took a lot of effort to scale up, but the foundations were already there.

“Clearly, it made the adoption for a lot of users a lot faster,” he says. “It went from being one of the options to be being a necessity of the hour, and our brand become a lot bigger.”

Signing up merchants at a cracking pace (in October COO Kiran Vasireddy said Paytm had gained five million merchants with QR code acceptance in a year and that the company processed $1.6 billion of transactions during the recent Diwali month, up three-and-a-half times year on year), the company learned a great deal about merchant and consumer behaviour and the power of the offline merchant network.

Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.